North Texas homeowners may soon see a slower rise in their property tax bills after Rep. Jared Patterson (R‑District 106) filed House Bill 563 on Nov. 9. The legislation would reduce the annual homestead appraisal cap from the current 10% to just 3%, a change that could keep family budgets steadier as home values continue to climb.
How the cap works
Under Texas law, a qualifying primary residence – the homestead – is limited each year by a percentage increase set by the appraisal district. Today the cap sits at 10% of the prior year’s appraised value. Patterson’s proposal would replace that ceiling with a 3% limit, while still allowing the market‑value ceiling and any new improvements to be reflected in the final assessment.
For example, a home appraised at $400,000 last year that the market now values at $450,000 would, under the existing rule, be capped at $440,000. HB 563 would cap the new value at $412,000, a $28,000 reduction in the taxable amount.
Potential impact on tax bills
The lower cap does not guarantee a lower tax bill, because local taxing entities set their own rates and can adjust them each year. However, by limiting the assessed value growth, the bill gives homeowners a tool to slow the pace at which their tax burden rises.
Dallas ISD’s 2026 tax rate of $0.985735 per $100 of taxable value illustrates the math. If a homeowner could keep $28,000 of value out of the tax base, the potential savings would be roughly $276 annually at that rate. While the exact amount will vary by district, the principle remains: a smaller assessed value translates into a smaller tax bill, all else equal.
Separate exemption discussion
The bill does not touch the existing $140,000 general school exemption, nor the additional $60,000 exemption for seniors and disabled homeowners that together can reach $200,000. Raising the general exemption to $200,000 would remove another $60,000 from the school tax base, saving roughly $591 per year for a homeowner who can use the full exemption, according to Dallas ISD’s rate.
Both the appraisal cap and the exemption increase are separate levers for tax relief. Lawmakers and voters will need to weigh the fiscal impact of each when the Legislature reconvenes in January.
Legislative path
HB 563 would take effect on Jan. 1, 2028, but only if the Texas Legislature passes the measure and voters approve a constitutional amendment (House Joint Resolution 38) authorizing the lower limit. Senate Bill 298 mirrors the House proposal as its companion.
State Sen. Paul Bettencourt (R‑District 7) recently reported that about 39.2% of Texas homesteads already pay no school property taxes after prior exemption hikes. Among those, 25% of general homesteads and 61% of senior or disabled homesteads owe nothing to schools. For homeowners already exempt from school taxes, a larger exemption would not provide additional savings, underscoring the importance of the appraisal cap as a distinct avenue of relief.
What Texas families should watch
When the 2027 session begins, homeowners will have two clear benchmarks for evaluating property‑tax reform: the rate at which appraisal values can grow and the size of the exemption applied to school taxes. Both measures aim to protect family finances while preserving the funding needed for quality education.
Supporters argue that limiting appraisal growth respects the Constitution’s protection of private property and aligns with the Trump administration’s emphasis on individual liberty and family stability. Critics caution that reduced appraisal values could shrink local government revenue, potentially affecting services unless tax rates are adjusted.
Regardless of the debate, HB 563 offers a concrete proposal that puts Texas families at the center of the conversation about fair and predictable property taxes.
Original reporting: The Dallas Express — read the source article.
